Citigroup Charged slammed £61.7 Million For $444 Billion Keyboard Slip-Up

UK financial regulators issued a £61.7 million fine to Citigroup after the company made a $444 billion input, resulting in an unintended stock sale totaling $1.4 billion in the European markets.

The Citi trader who made the error wanted to sell a bundle of equities worth $58 million; however, he made a big mistake and inputted a significant $444 billion value. This is equivalent to Denmark’s GDP.

Citigroup’s System Cancels $225 Billion Of Total $444 Billion In Equities From Processing

The company’s system was able to block $225 billion worth of equities from processing, but it couldn’t stop the remaining $189 billion from going through. The $189 billion went straight to a trading algorithm. The chosen algorithm was developed to place portions of the overall order for market sale over the day’s remaining hours.

According to the latest update, the trader canceled the order, but $1.4 billion worth of equities was already distributed to traders in European exchange markets. This aligned with a significant short-term drop in a few European indices that lasted for some minutes.

The Financial Conduct Authority (FCA) investigated the case and discovered that some trading control frameworks in Citi usually worked as predicted, but some primary controls did not.

These controls were either not available at the time or deficient. Precisely, there needed to be something more robust to stop this big mistake with stocks entirely and prevent the equities from going into the market.

The regulator said Citigroup’s trader couldn’t stop a pop-up alert showing the big mistake because of poor design. The trader would have to read through all the alerts in the system to see which ones reveal mistakes. They also reported that company’s real-time monitoring was ineffective. This means it wasn’t quick enough to raise internal alerts about the significant trade input errors.

FCA Advices Firms To Use Effective Systems To Prevent Fat-Hand Errors

The Financial Conduct Authority’s Steve Smart, the Joint Executive Director of Enforcement & Market Oversight of the regulatory body, spoke about the latest issue. He noted that the regulator wants trading companies, including those utilizing algorithmic trading, to set up systems and controls that are effective to prevent errors like this from happening.

Steve also said the error led to more than a billion pounds of wrongful orders being executed. He revealed that the mistake could create a disorderly market. Companies are advised to review their control system and ensure they are quick and up-to-date to follow the complexity and speed of financial markets.

The Financial Conduct Authority’s charges were £27.8 million, precisely a 30% discount, as Citi could not dispute the findings. Prudential Regulatory Authority also investigated the issue and issued a fine of £33.88 million to the company afterward.